The Arkansas Supreme Court ruled that when the government obtains privately owned land that possesses a restrictive covenant and the government’s use of the land violates that same covenant, the owners of the land that was seized by the government will not receive compensation.
When a restrictive covenant runs with a parcel of land and the government acquires that land and violates the covenant, the dominant estate will not receive any compensation for loss of value.
The McNeils (Plaintiffs) purchased a home in a sub-division with restrictive covenants. The sub-division’s covenant emphasized that the land was only to be used for residential purposes. The state of Arkansas’s highway patrol (Defendant) planned to build a highway that would ultimately utilize the Plaintiff’s land. Essentially, this would violate the covenant. Furthermore, with the highway running across the Plaintiff’s land, the Plaintiff contends that the value of his property was reduced by $10,000. The trial court awarded damages while the Defendant appeals.
Whether a state who obtains a piece of land from a dominant parcel and utilizes that piece of land to construct a highway; which ultimately decreases the value of the parcel of land, must the state compensate for the loss of value?
No. The owners of the dominant parcel will not recover any damages when the government obtains and utilizes a part of the dominant parcel. The Supreme Court determines that the construction of the highway; although violates the covenant, does not cause any actual damage to the Plaintiff’s land and therefore no damages cannot be sought. Therefore, the Court reverses the trial court’s ruling in favor of the Plaintiff and remands the case to the trial court.
The court emphasizes that the mere violation of a covenant does not cause any actual damage to the property. While although the land may lose its value because a highway runs adjacent to the house, not actual harm was caused to the land because of the violation of the covenant.